Patience, Defined Risk, and Sticking to the Process in $MDT

This is not a victory lap.

This trade is still open, and it may very well end up a loser. In fact, the odds say it probably will. More than 70% of my long call trades lose money. That’s just math.

But don’t let a low win rate fool you into thinking long calls can’t work. If you have the discipline to hold onto the winners as long as they keep working, the math flips in your favor. A handful of big winners more than covers a graveyard of small losers.

Take my current trade in Medtronic ($MDT) as an example.

I’ve been long the June 2026 $100 calls since July 28th. I liked the setup because earnings were coming up, and I thought that could act as a catalyst for a breakout. I also liked the structure of the trade — long calls mean my risk is capped at the premium I paid ($4.25 per contract). The stock could go to zero, and my max loss is still $4.25.

Defined risk. No guesswork.

But that doesn’t mean risk management stops there. I also had a chart level in mind: $88.50. That level acted as resistance three separate times off the April lows, and when the stock finally pushed through it, the level flipped to support.

To me, $88.50 mattered.

Then came earnings. On August 19th, $MDT gapped down hard, opening at $87.83 — and traded a full dollar below my stop level.

Did I panic?

No. There was no reason to. My risk was defined. I knew exactly what the worst-case scenario was. Plus, I’ve got time — these options don’t expire until June 2026.

More importantly, I stuck to my process. And a key part of my process is this: I wait for closing prices before taking action. If a stock closes below my stop, that’s my signal to exit the next morning. Not intraday noise. Not fear. Closing price.

That rule saved me here.

Because while $MDT opened below my stop, it spent the day rallying and finished back above $88.50 — at the high of the day, no less. That meant I stayed in. And the stock has since pushed higher, right back into the pre-earnings pocket.

That looks bullish to me.

Will it keep going? Maybe. Maybe not.

But that’s the point. I don’t need to know what happens next. My process keeps me in position to find out. The only way to win is to still be in the trade when the winning move comes.

For now, I’m still here.

Let’s go.

Sean McLaughlin | Chief Options Strategist, All Star Charts